Friday, November 28, 2008

This is a short but accurate article from Realtor.org outlining 3 mistakes a Realtor can make to quickly lose their client's trust.

I can relate to Rule #3:

Saying what your client wants to hear. When I hired the father of one of my son’s friends to sell my last home, I asked him if we could get a very ambitious price for it. He said what I wanted to hear: "No problem." Well, he got the listing but couldn’t sell the house.

So I brought in the top salesperson in town, and she promptly told me what I didn’t want to hear: "Replace these windows and lower the price by $125,000." She sold the house in less than a week. I recommend her to everyone.

I know for a fact I have lost listings to competing Realtors because I told the clients what they didn't want to hear. But I also admit that I try and educate the client and can forget that building repoire is also an important part of earning someone's trust.

Anyone out there have similar stories? Like when you hired your friend only to fire them 6 months later, hired a top producing agent, they showyou statistically why you need to reduce your price by $100,000 and the house sells 30 days later?

Monday, November 3, 2008

According to this 2007 report by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, there are (were) 128,203,000 housing units in the United States. Of those, 64,231,000, or 50%, are owned free and clear.

If 1.2 million homes are in foreclosure at any point in time that would equate to less than 1% of all homes in the country or 1.9% of the 63,972,000 homes that have at least 1 loan on the property.

Then let's assume that each quarter 1.2 million homes go into foreclosure. That equates to less than 4% of all homes in the country (4.8 million homes) or 7.5% of homes with at least 1 loan on the property.

Are we really to believe that because 7.5 out of every 100 homes in the country went into foreclosure our economy was thrown into a recession, mutliple financial corporations were forced to shut down and the stock market tanked? Unless I'm severely off on my math the numbers just aren't adding up.

Wednesday, October 29, 2008

In Vegas you can bet on pretty much any sporting event. Even some you've never even heard of. Turns out our economy is the same way. But it hasn't always been that way. I recently watched this 60 Minutes special on Credit Default Swaps and how they contributed to our current economic downturn. Enlightening to say the least. Check out the written transcript here if you don't want to watch the video. Even for a financial novice like myself it makes perfect sense. And it's extremely worrisome.

What are credit default swaps? Steve Kroft of 60 Minutes states,

"Essentially they are side bets on the performance of the U.S. mortgage markets and the solvency on some of the biggest financial institutions in the world. It's a form of legalized gambling that allows you to wager on financial outcomes without ever having to actually buy the stocks and bonds and mortgages."

Kroft goes on to say,

"Think of it for a moment as a football game. Every week, the New York Giants take the field with hopes of getting back to the Super Bowl. If they do, they will get more money and glory for the team and its owners. They have a direct investment in the game. But the people in the stands may also have a financial stake in the ouctome, in the form of a bet with a friend or a bookie."

This type of betting and gambling used to take place in what was called "Bucket Shops" which were outlawed around 1907 after the stock market fell 50% from it's peak the previous year. In 2000 Congress exempted this "Bucket Shop" law and the credit default swap markets went soaring from roughly $100 billion to more than $50 trillion dollars. Yes. Trillion. According to the report,

"You could bet on anything from the solvency of communities to the fate of General Motors...A lot of the money was made financing what seemed to be a never-ending housing boom, selling mortgage securities they thought were safe and credit default swaps that would never have to be paid off."

And then the housing market took a turn for the worse and there was not enough money to pay off the debts which is essentially what ruined Bear Stearns, Lehmann Brothers and AIG. The scariest part of all this is that these credit default swaps are completely unregulated so we have no way of knowing how much money is still floating out there.

Hedge funds operate in a very similar manner and I posted my thoughts about this a while back and how I feel it can be conflict of interest when a person who is influential over a particular market or industry can bet for or against itsself and reap the rewards. This just doesn't make sense to me. But again, I'm no financial guru. What I took away from this report is that we simply allowed anyone to bet (Trillions of dollars) against our own housing market which at the time was similar to betting against the race horse who is favored to win. Then when the housing market started suffering people demanded their "winnings" and there simply wasn't enough cash to go around and the gears quickly grinded to a hault.

So...I contend that while the housing market has seen better days, it's certainly not what got us into this mess. A law was created roughly 100 years ago in order to prevent a stock market crash. Here we are eight years after the law was overturned and look at where we're at. It's funny how history repeats itself and we'll just never learn from our mistake.

Friday, October 10, 2008

I thought Pepto Bismol was supposed to soothe your stomach, not make you nauseous. Not only am I baffled as to why someone would paint their kitchen this color, I'm more confused as to why someone would actually buy this house. It's under contract and is severely overpriced.

I sent the following email out today to my friends and clients. It was after I sent this email that I noticed the stock market fell yet again to below 9,000 points for the first time since 2003. It is during times like these that more millionaires are made than during times of prosperity. I think this is because it forces us to become more introspective and take a good look at our spending behaviors and locate areas that need improvement. It also allows people to identify areas of need that may have been overlooked when everyone was rolling in the dough.

So keep your heads up. "This too shall pass."

Dear friends,

Much has been said recently about the state of our country’s economic climate so I wanted to share a bit of advice during these difficult times and hopefully clear up a few things, even if only slightly.

Tip #1 – “Spend less money than you make”

As simplistic as this might sound it works. It works in any economic climate both good and bad. If you make $5,000/month and you’re spending $7,000/month then you will soon be broke. One positive thing that is coming out of all of the financial turmoil is that it is forcing many of us to take stock (no pun intended) of our financial situation and tighten our belts when it comes to superfluous spending. If we train ourselves how to operate on a budget now we will be able to enjoy the good times without reservation and guilt when it arrives. If you don’t have a personal budget there isn’t a better time than right now to get started on one.

Tip #2 – “Now is the best time to buy”

Not only does this statement pertain to real estate but certainly the stock market as well. “Buy low, sell high” makes sense to me and there are bargains to be had. If you’re trying to time the bottom of the market then please let me know when it gets here. The most educated financial gurus in the world will tell you the only way to know you are at the bottom of any market is when it is has already passed you by.

Tip (myth) #3 – “But there isn’t any financing available!”

Wrong! This is perhaps one of the biggest myths floating around the media outlets. If you are currently renting and have a credit score of over 700 and can comfortably put 10% to 20% down on a property you are the best candidate to take advantage of our current real estate market. There isn’t a bank in this country that won’t give you a loan on a home right now. Anyone that tells you different has been misinformed. A huge developer trying to get a loan to build a 150 unit high-rise condominium in Dallas is a different story.

Tip #4 – “If you have questions about the stock or real estate markets ask a professional”

Are you curious about what your home is worth in today’s market? Are you unsure of what to do if you have money in the stock market? Should you be buying stock or moving your money around? Most people today are talking about these issues with their co-workers, neighbors or friends and should probably be talking to a professional. Call your financial advisor and request a meeting with him or her. If you don’t have one but are thinking of hiring one give me a call. I’ll be happy to refer you to some top notch professionals. As far as real estate goes if you’re hearing things about the real estate market and want clarification just pick up the phone and call me. Don’t be afraid to ask the hard questions. That’s what I’m here for. And, unlike our favorite politicians, I won’t make up statistics just to sound smart.

4800 Preston Rd. - House of John and Lyn Muse. Valued on DCAD for just over $30 million. (Land is worth $21,175,000)Description: 8 year old house with 25,000 sf, with all sorts of cabanas, guest quarters and greenhouses sitting on 7.7 acres and backs to Exall Lake.

4101 Beverly Dr. - Home of Edwin Cox Trust. Valued on DCAD for almost $22 million. (Land is worth $21,832,500)Description: 97 year old home with 20,000 sf, pool, tennis court, etc. all on 6.6 acres and backs to Exall Lake.

And then I click on 4100 Beverly Dr. and 4101 Mockingbird. Home of Dallas Country Club. Total value on DCAD is just under $10 million. Wait. What?Am I reading this right? Description: One of the most prestigious country clubs in the country with roughly 10 buildings that total around 150,000 sf of air conditioned space sitting on 113 acres in one of the most expensive neighborhoods in the country.

In summary, according to DCAD, Ed Cox and John Muse's combined 14 acres of dirt is worth approximately $43 million. Dallas Country Club's 113 acres and 10 buildings is not even worth $10 mil. Do country clubs fall under the church and school categories when it comes to property taxes? Am I missing something here?

Monday, October 6, 2008

Where to begin dear readers? There is so much "stuff" out there to sift through that it's tough even for us that sell real estate full time to figure out which way is up. So allow me to clear up a few myths that are running amuck.

Myth #1: "There is no financing available for buyers"

False: If you have over a 700 credit score and are putting 10% to 20% down on your home purchase, there is not a bank in America that won't give you a loan. If you have a 615 credit score and can only afford to put 3% down on a home purchase then you probably shouldn't be buying a home. Instead, try paying down your credit card debt, getting that credit score up and saving up so you can put down 10% to 20%.

Myth #2: "The bailout plan will free up money for buyers"

Unclear: While I do believe this will free up money for some buyers, it's my opinion that it's only freeing up money for those people I just described above. There is not a bank out there that is willing to take on too much risk. For example, if I wanted to get a loan to build a $100 million, 100 unit high rise on Turtle Creek, there isn't a bank out there that would give me money because our city - and country - is overbuilt. See the difference?

Here is what some folks are saying about the bailout and the Countrywide mortgage relief settlement.Regarding the bailout, Shawn Hartmann, a Realtor in Minnesota writes, "With taking the financial hardship off the lending institutions from the non-performing assets, the lenders are now able to free up capital to lend more money. " I agree. But not for just anyone. See my examples above.

Regarding the Countrywide settlement, "This is good," said Christopher Whalen, managing director at Institutional Risk Analytics, a provider of analysis and ratings for banks. "I hate to say we'll need to see a lot more of this, but we will. Banks have no choice because the economy's getting so flat. They're going to become increasingly aggressive about keeping homeowners in their homes." I think this is a step in the right direction but will definitely not solve our problems. There are many other unforeseen consequences that we have yet to see and I think these quick solutions will have long term consequences.

In closing, I believe this is the tip of the iceberg. What hasn't been mentioned is the amount of credit card debt looming in the background. When people can't pay their mortgages they stop paying their credit cards first. Then they stop paying their mortgages. Wachovia, WAMU, BofA, Chase all hand out tons of credit cards each year. All of these banks also deal in mortgages. No one has mentioned how the credit card issue has impacted their cash flow concerns which worries me.

Bottom line is that if you have good credit and can put 10% on a home you have nothing to worry about. If you don't have good credit and don't have much free cash, then you probably don't need to be in the market and never should have been in the game over the last 5 years. It's not your fault. You were just given bad advice by greedy lenders. So if you're looking to buy or sell and want straight up advice, give me a call. I'll be happy to make this all as clear as mud for you.

Friday, October 3, 2008

Over at Dallas Dirt Candy posted some production numbers for the Preston Hollow and Park Cities areas. To me her source's numbers were a little vague and didn't give the clear picture of who was doing what type of production. If you know me at all, you know I love me some numbers. I didn't look specifically at the companies but at the Top 50 producing agents. I find that just as interesting. So dig in, analyze, discuss. (Can you believe I came in abovenumber 1? I needed my own line because I'm in a different league. This was so unexpected.)

Saturday, September 27, 2008

Hello dear DREB readers. I have racked my brains deciding what to say about all of the mess we are currently hearing about on the news and the interwebs. And oh do I have much to say about this nasty economic business and plenty of blame to pass around to boot. So I have decided to share my thoughts one-at-a-time. And here we go.

Reason #1: People don't know how to stay in their damn houses

Over the past 4 years people took out "creative mortgages" and may or may not have been educated as to the fact that they took out 103% of their home's value. Assuming your home is worth $100,000 ($103,000 loan) you now have negative $3,000 equity. Awesome! So you live in your home for 2 years and realize around 5% appreciation over those 2 years, overall. Now your home is worth ~$105,000. Great! But you want to move up in the world so you call me, a Realtor, to help you sell your home. It costs roughly 8% to sell a home which means that if you sold your home for $105,000 - you owe $100,000 to the mortgage company - you would have to bring around $8,000 to closing. But you don't have that because you don't know what savings are and you put NOTHING down at closing. So you're screwed and have to either engage in a short sale with your bank or go into foreclosure.

While many people are blaming the lenders for lending these people money in the first place without putting any money down, no one told these people they should move and sell their home after 2 years. And the homeowners certainly don't want to take responsibility for their actions so they blame the lenders and let their homes go back to the bank and hurt their neighborhood sales statistics.

I've said it before, irresponsible homeowners are just as guilty as irresponsible lenders for getting us into this economic mess. And I don't feel sorry for either of them.

Wednesday, September 10, 2008

You must see this impeccably updated ranch home on a 120x125 corner lot. Centrally located just north of Hockaday this home boasts 2,718sf with 4 bedrooms, 3.5 baths and a 2 car attached garage. The 4th bedroom is split and has a private full bath. The open floor plan is accentuated by the many large windows in the front and rear of the home and the open wall between the formal living room and family room. The plantation shutters enhance the already stunning curb appeal while the 2 large trees and lush landscaping complete the picture. Looking onto the crystal blue pool in the rear of the home is the oversized master bedroom with plenty of closet space and an updated master bath with travertine floors, tumbled marble accents and a Jacuzzi tub. The crown jewel of the home is definitely the kitchen featuring granite counter tops, double ovens, butler's pantry, large breakfast area with floor to ceiling windows, built-in buffet and plenty of cabinet and storage space. And finally, you won't want to miss the pool in the backyard with a spa and waterfall for those hot summer days. Or enjoy the large covered patio on those cool, crisp Fall evenings. And of course there is plenty of grass space including a spacious side yard for play equipment, gardening, pets or any other uses you can think of. This home offers something for everyone and is in one of the most sought after and established neighborhoods South of LBJ.

According to this study out of the U.K. While sad, it makes perfect sense to me. Society is becoming so dependent on making money on their homes that they're not focusing on making money at their jobs. Or by learning to curb spending habits and actually saving their money. What an amazing concept. I should write a book on that. [Sarcasm]

Monday, July 28, 2008

The above home was built for a family on ABC's "Extreme Makeover". Now they have let it go into foreclosure because they used their "equity" on a botched business deal. I've heard that roughly 80% of people who win the lottery eventually have to claim bankruptcy. I've also heard that the winners of HGTV's Dream Home giveaway eventually have to sell the home or end up getting foreclosed on. The moral of the story is that people don't appreciate, or have the wherewithall, to use free handouts (bailouts) appropriately and better their lives. People in general are stupid and I've always maintained this stance. And this story is no exception. Our society keep bailing people out, like in the current mortgage crisis, and people will continue to squander the money away and end up in worse situations than where they began.

Bottom line is this, if you don't have blood, sweat or flesh in the game, then you won't appreciate what you're given. Learning lessons the hard way is the only way to prevent future stupid decisions.

Which do online real estate tire kickers prefer? I've posed this question before, and according to a recent poll of 500 adults by Obeo, a residential real estate marketing company, photos are a must. More specifically, it was found that "94 percent of all women surveyed said photos of a home would be very helpful in their search for a home while nearly 70 percent said 360-degree panoramas would be very helpful." I'm not sure what the men had to say about the matter as that information wasn't given, but 94% is a pretty staggering number that speaks volumes.

I post this information because, IMHO, many agents and sellers waste money on virtual tours when people would rather scroll through 10 pictures and be done. So why did the women overwhelmingly want pictures over a virtual tour? Shockingly, I have an opinion on the matter. First, we must ask, "what is the purpose of a virtual tour or multiple photos?" To get your happy a** into the home, of course! I want that person scouring the internets for a home at 11:37pm to see one of my listings and say to themselves, "I want to see this home!" And then send me an email or call their Realtor up and say, "Meet me at this house tomorrow!" Multiple photos can accomplish this without a virtual tour - which may or may not take 30 seconds (about 7 hours in internet time) to load. Whereas, you can click through 10 photos in less than a minute and get a good "feel" for the home. And when you're sifting through 168 homes in East Dallas between $300 and $400K, who is going to wait for a tour to load?

Friday, July 4, 2008

So i'ts been about a hundred years or so since my last post. I went to blog rehab, refocused on my business and things couldn't be busier or better. So what better to post about than the great news that is Dallas real estate.

The PMI Group just released it's Summer 2008 U.S. Market Risk Index that "ranks the nation's 50 largest metropolitan statistical areas (MSAs) according to the likelihood that home prices will be lower in two years." At the top of the list is Riverside, CA which is most likely to experience a (continued) price decline 2 years from now. At the bottom of the list? Drum roll please...well, it's Ft. Worth and Arlington. But right above them is Dallas, Plano and Irving! So we're the 2nd least likely city in the nation to see a price decline in the next 2 years. Not too shabby. Here's the Top 10 "most riskiest cities".

Monday, April 21, 2008

Thank you for your comments and all of you are "spot on", as the British - or whoever - say. Everything in life has to have a balance and blogs are not exempt from this rule. I will continue to share my thoughts on Dallas real estate because this blog has been an incredible source of release for me. I was telling someone the other day that I truly feel as though I can empty my head at the end of the day onto this blog and there is something very cathartic about that.

The notoriety and name recognition is great even though there is no measurable or tangible monetary return at this moment. Is that a reason to give it up? Absolutely not. I'm not that naive and I know this blog can pay off down the road. But time spent on this blog was not compensatory with what it was bringing in and that can become a problem after a while.

So I'm not going anywhere any time soon. While posts may be less frequent there is always something I can talk about. Plus, there are way too many uneducated real estate agents and real estate consumers out there that need my help.

I got an email last week from someone who happened upon my blog asking me what areas he should check out while he's in Dallas for the first time to view some serious real estate. I sent him to Strait Lane, Lennox, Ursula, Park Lane. I even gave him Mark Cuban's gated estate location. Then I advised him to check out Beverly, Armstrong and the picturesque Lakeside Drive (my fave). What did he think? Oh, he liked. He sent the following email after he returned home. We should take note of his Beverly Hills/Park Cities impression. Go Dallas!

Hey Jeff,

I am back from my trip to Texas. I had a great time and thought Dallas was very nice. As for the Park Cities and Preston Hollow, all I can say is wow. I have done a lot of traveling and always try to check out the prime real estate and I think your area is perhaps the best. The homes are so beautiful and they all blend in so nicely with each other. The flats of Beverly Hills, similar to the Park Cities, has been ruined with very large and ugly new construction. The new homes in your area fit in pretty well and the occasional modern houses are cool.

All the beautiful parks and the nice shopping areas also add nicely to the community. I was very impressed and will now spend the coming days obsessing about this area. Somebody on Wikimapia had placed on the site a lot of information on many of these homes. At the time I saw this I did not realize I would be coming to Dallas and the information has since been deleted. This also happened in Palm Beach. I guess the owners of these properties got upset. I can't blame them but it was great information and now that I have been there, I wish I could go back and review it.

Thanks for your best street list. I made it to all the streets you recommend and it was a big help since the area is so large. You definitely sent me in the right direction. I forgot to ask you where Volks Estates is? River Oaks in Houston is also very nice but was much more impressed with your area.

Sunday, April 20, 2008

Thanks for your emails and comments over the past 12 days. I'm sure all 3 of you are on pins and needles as to when and what I will post next. Sorry to keep you waiting. But I have a little dilemma and I need your help and support. Since November of 2007 I have spent roughly a good 3 hours a day working on my blog whether posting or reconfiguring the layout, etc. And I probably spend another 1 to 2 hours reading other blogs which is where I get a lot of information and ideas. In my Blogger profile I prophectically wrote, "Jeff is new to world of blogging and only time will tell if his business will suffer because of it." Let me be clear, my business hasn't suffered since starting this blog but it sure takes a lot of effort and time to keep it full of information that is only slightly entertaining to a handful of you regular readers. And then I read this opinion article in the latest edition of Texas Realtor Magazine about how social networking and blogs can be a huge waste of time for business professionals.

"...you can pour endless hours into without any substantive monetary return. Stop it already, and implement what works because it works, not because it is neat or new." says Michael Parker, principal at Blackwater Consulting Group.

He goes on to say,

"What, then, is important? Hits, page rank, page views? No. Once you cover the Web-site basics in a professional manner, the only things that matter are results: the quality of leads you derive from your efforts; how many of those leads you convert to sales; and whether Internet buyers can find your site in one click."

I agree with his logic from a business standpoint. And this is the root of my dilemma. I truly enjoy reading blogs about real estate and sharing my thoughts on real estate issues. But is it a good use of my time if it's not bringing in revenue? When I talk with other people who read blogs on a daily basis I can't think of one person who hasn't said, "I'm addicted to reading blogs". I'm sure there are many of you out there who have said the same thing. I know of one person who has blocked blogs from his work computer because he wasted so much time reading them. I don't want to become that person. Like alcohol and crack, use in moderation. Just kidding about the crack. I'd love to hear what you think.

Either way, fret not ye faithful readers. I will continue to post my opinions on this blog but I think the days of spending 3 hours doing so are long gone. So long to the nights - or early mornings - of the 2am and 3am blog posts. I'm hoping to post 3 or 4 times per week and I hope they will knock your socks off. More importantly, I'm sure I'll continue getting a rise out of my fellow Realtors and homeowners.

Thanks for reading and thanks for the support. You'll be hearing from me.

Tuesday, April 8, 2008

One of my biggest pet peeves is when other Realtors - and even clients - tell me they didn't fulfill a commitment or duty because "they were busy". I am currently co-chairing a committee for a Leadership program and one of my committee members told one of the slackers that we expect more involvement from them. The slacker's excuse was that she has "had a busy year and her schedule has just been hectic". What she didn't realize is that she was speaking to a lady whose father-in-law had passed away 2 days prior and still made it a point to fulfill her duties and then some.

When you tell someone you didn't return their email or phone call because you have "been busy", you are basically telling them your time is more valuable than theirs. Realtors are notorious for spitting out this poor excuse like it's second nature and I simply can't stand it. I have even caught myself saying it at times but my friends and colleagues have been nice enough to call me to the carpet when this happens.

Next time you hear this excuse from anyone, make sure to tell them no one person's time is more valuable than another's. So that excuse doesn't sit well with me, nor should it with you.

DALLAS (Dallas Morning News) – Spectrum Properties Ltd.'s downtown 17-story luxury residential tower — called 1407 Main — is set to open officially April 21.The tower includes ground-floor retail, a parking garage, a rooftop pool deck, a bowling alley, a theatre and more than 80 residential units. Rents range from about $1,495 for a 751-sf unit, to more than $4,000 for a 1,700-sf penthouse.Good, Fulton & Farrell Architects designed the project.

Bowling alley? Really? With 80 units I'm sure there will be no arguments over who can use it and at what times. Oh yeah, how come have I NEVER heard about this building until this very day?